Month: May 2018

Hong Kong’s latest wealth management news service covers the forthcoming release of a report that ranks Asia’s top robo-advisors and dives in to how the underlying scoring of the academic research works.

Privé were invited to speak at the “Inside the mind of brilliant designers” by global learning company General Assembly in the plush surroundings of Collision 8 in Singapore. Our own Heloise Jutteau, UI/UX Designer, spoke about her inspirations in design for the fintech industry as well as how she applies her design process in Privé Technologies.

She spoke about the importance of understanding how UX is a part of the design process and how it is very easily adaptable with no limits. UX design is relatively new in the industry and the skills attached to the role is constantly evolving. She encourages people to keep doing what they love and that the rewards will reap itself.

A huge thank you to General Assembly for having Heloise represent Prive Technologies as a guest speaker.

Investors need to be informed not just about the assets they are investing in, but also how much fees are involved in the process. While engaging a professional financial advisor to manage your investment and customise an investment portfolio that suits your needs sounds like an excellent plan, it does not come free.

Therefore, it is pertinent to understand how much you need to pay when looking to engage the services of a financial advisor or investment management firm, as such fees will have a direct impact on your return. Every cent counts towards performance in the long run.

Here, we take a closer look at the different types of fees investors will encounter:

ADVISORY FEE

Many financial advisors and wealth management firms charge their clients based on a fee structure, and the most commonly used fee structure in the industry is charging a percentage of the total assets managed. The average fee paid to financial advisors and wealth management firms is usually between 1-2% of the total investment sum of the client’s account annually.

It is worth noting that the advisory fee percentage is often scaled, and often decreases as the amount of assets under management increases. For example, a financial advisor may charge a client 1.5% annually to manage an investment account of $100,000 or less, but charge less than 1% for an account of more than $1 million. In short, you have more negotiating power when you have a larger portfolio size.

TRANSACTION FEE

Additionally, you will also incur a transaction fee each time you buy or sell a mutual fund or stock. Such fees range from product to product, with mutual funds generally gravitating towards higher transaction fees, compared to exchange-traded funds (ETF) and stocks. Trading fees vary depending on the volume transacted and which market. In Singapore, commissions for purchasing local equities and ETFs can be as low as 0.12% and 0.08% respectively. As such, ETFs and stocks are more attractive to investors who wish to keep their transaction costs low, as these products can be transacted for relatively low fees.

PrivéTech Team

In the latest annual wealth management report from Boston Consulting Group “BCG”, the astounding growth of personal wealth is reported to continue globally in 2017. With this backdrop, we examine the challenges and impacts that are arising for wealth managers and the technology the wealth management institutions in the Asia region will require to meet the evolving customer demand profile.

The trends of rising investor wealth as well as rising numbers of wealthy investors, are clearly positive drivers for the wealth management industry. Whilst residents of North America held nearly 43% of global personal wealth, followed by residents of Western Europe with 22%, Asia continued the trend of clocking the strongest growth, with a 19% year on year rise in the region’s wealth from 2016 to 2017 (shown in Exhibit 1). The growth of UHNW and HNW individuals in Asia is expected to be double by 2022 (shown in Exhibit 5).

Challenges for Wealth Managers

Behind the data lie some significant challenges for the wealth management industry in Asia. Despite the target customer base growing in size, the customer is also increasingly disengaged with the traditional wealth management service model.

The effects of digital disruption are a major contributor to the revenue and profit challenges faced by wealth manager (BCG, 2018).

Traditional approaches are increasingly ineffective, as clients lean towards receiving a customized experience, similar to the other digital touchpoints from retail to travel, that they use daily.

Wealth management is a client-service business. When a client needs and/or is expecting change, wealth managers have to serve them. What differentiates wealth managers today is the capability to deliver a personalized service to clients. Some are leveraging data availability and analytics to build personalized experiences for clients based on their needs, preferences, context and behaviours. But many are not yet. BCG research suggests that more than 70% of wealth management clients see highly personalized service as a key factor in deciding their provider.

Traditional approaches are also increasingly uneconomic. So not only does the customer not want them, but they are expensive to deliver. Technology serves a key role in transforming business to re-focus on delivering superior customer experiences in an efficient way.

BCG identify four critical challenges that the wealth management industry is facing:

Integration complexity

The digitization process requires work to be done in an agile fashion given the amount of changes required. Orchestrating cross-functional teams is key to drive technology change alongside operating model changes. This move creates an opportunity to building minimum viable products, testing and learning and failing fast.

Change as a team

The initiative to implementing the change should be seen as a top priority by the entire firm. Members of executive suite must instill positively to every member in the organization in order to bring about the needed behavioural changes.

Useful data

Client and product data creates challenges owing to the data’s heterogeneity and disparate sources. This data tends to be highly fragmented, in which 35% of the data is meaningful to wealth managers. The challenge here is to pull key information and maximise its use across engagement with RMs, client service and back-office functions.

ScalabilityUndeniably, wealth managers handle massive and standardized data in their day-to-day. It is crucial that they have sufficient understanding to apply latest analytics techniques to create value for their work. Such that various data types are linked in a way to allow step-change insight, both at scale and at the level of individual clients.

Technology Solutions for Wealth Managers

At Privé we are strong believers that the only way wealth managers can survive and thrive in the new environment is to embrace digitisation and adopt quickly.

Here are four technology solutions that BCG identify which resonate strongly with our ethos.

Capture new client leads

The initial contact point in wealth management begins with the RM. Advanced analytics and data enables identification of early signs of potential attrition and enables leads scoring based on complementary data capture. This keeps the relationship manager (RM) focused on customers who are more valuable, rather than churning potential leads. Additionally, maximising RM effectiveness with new clients by using lead score and smart rules driven by advanced analytics, enables the RM to leverage a set of proven prospects.

Interaction with existing clients is key to engaging their interests and strengthen relationships between RMs. Analytics helps to raise timely and personalized suggestions to clients and encouraging relevant discussion between client and RM that could deepen the relationship.

Privé solution: iEngage (stimulate your clients in to taking more action by using content to deliver sales ideas, then track and serve tailored experiences using the client data)

Improve client experience

Develop a dynamic pricing using data such as client’s individual situation and long-term value omitting unnecessary discounting by RMs. Resulting in a personalized service delivery with greater transparency.

Privé solution; Ordering and re-balancing module to automate execution and pricing structure in a more homogenised and stream-lined way

It’s clear that technology is going to play arguably the biggest factor to keep wealth management firms not only efficient, but also relevant to customers in the short, medium and long term.

We echo BCG’s conclusion that unlocking the value of data will create unbelievable business opportunities, however, success also depends on having the ability to adapt to the change and the leadership to drive effective integration of key capabilities and mandate complexity efficiently.

Speak to us about how we are helping financial institutions in Europe and Asia to drive digital transformation and seize new business opportunities.